Your Top Questions Answered
According to the Bank of England, 3.6 million mortgages are set to be renegotiated over the next three years, around 41% of all outstanding home loans. If you are one of them, it’s natural to have questions about what happens next.
Remortgaging can feel daunting, particularly if your last deal was fixed two or five years ago. The market has shifted considerably, rates have changed, and the process itself can be confusing. To help you prepare, here are answers to some of the most common remortgage questions.
What is a remortgage?
Remortgaging is when you switch to a new mortgage deal on your current property, usually with a different lender. By replacing your old mortgage, you may be able to access a better rate or avoid moving onto your lender’s Standard Variable Rate (SVR), which is usually more expensive.
When is the right time to remortgage?
If you leave it too late, you risk rolling onto your lender’s SVR. Many lenders allow you to arrange a new deal around six months before your current one ends.
Acting early gives you time to explore your options and avoid unnecessary cost.
How long does it take?
Halifax estimates that the remortgage process can take between four and eight weeks from application to completion.
Legal work and, in some cases, a property valuation may be required, so having up-to-date documents ready and responding quickly to requests can help keep things moving.
Can you remortgage too early?
Yes. Completing a remortgage before your deal expires often means paying an early repayment charge (ERC). These vary by lender but can be costly.
Timing is important, and you’ll also want to factor in potential fees such as arrangement charges, valuation costs, or legal expenses.
Is loan-to-value (LTV) important?
Very much so. LTV helps determine the rates available. A lower LTV means your outstanding mortgage is smaller compared to your property’s value, which represents less risk for lenders. In turn, this can open the door to more competitive deals.
What if my property has dropped in value?
If your home is worth less than when you bought it, your LTV may be higher, or in some cases, you could fall into negative equity (owing more than the property’s value). While this makes remortgaging more complex, it doesn’t necessarily remove all options.
Do I always need to change lender?
Not always. A product transfer means switching to a new deal with your existing lender. It is often quicker and simpler, though it may not be the most competitive choice. A full remortgage with a new lender could unlock better rates or more flexibility.
Can I borrow more when I remortgage?
Some people use the remortgage process to release equity for home improvements, debt consolidation, or other needs. Remember, borrowing more increases the debt secured against your home, which comes with higher costs and added risks.
The takeaway
Remortgaging is one of the biggest financial decisions most households make. From timing and fees to LTV and lender choice, there’s a lot to consider. By knowing the key questions, and where the potential challenges lie, you’ll be better prepared when your deal comes to an end. For more advice, please get in touch.
Appletree Financial Services
Supporting clients with clear, professional advice when reviewing mortgage options.
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YOUR HOME MAY BE REPOSSESSED IF YOU DO NOT KEEP UP REPAYMENTS ON YOUR MORTGAGE.
